What is Risk Tolerance?

Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand. It is a crucial factor in determining an investor's asset allocation and investment strategy.

Factors Influencing Risk Tolerance

• Time Horizon: Longer time frames can accommodate more risk.
• Financial Situation: Higher net worth may allow for greater risk.

Investors should assess their risk tolerance regularly to ensure their investment strategy aligns with their comfort level.